Introducing PlotX Participation Mining
An incentive program to bootstrap liquidity on the PlotX prediction markets.
This proposal details an incentive program, called PlotX Participation Mining, that will reward a user every time he/she predicts on a PlotX Prediction market.
Each time a user takes a long, neutral or short position on PlotX prediction markets, the user will become eligible for incentives in PLOT in proportion to the number of positions they bought. The incentives can be claimed post the settlement of the market and shall be valid irrespective of whether the user wins or loses their prediction.
PlotX protocol launched on the 13th October 2020 and has since seen 154 users participating in various prediction markets being created by Market Creators.
However a common question in the community is around - “what happens if I’m the only participant in a prediction market, and I end up losing my prediction at the settlement time?”. This is also reflected in one of the governance proposals initiated by a community member (0x3734…ebe4f) at https://govern.plotx.io/proposals/5
The default behavior of the PlotX protocol is that in the case of a single participant losing his/her prediction, the funds are moved to the DAO. These funds are then used to create a self-sustained DAO ecosystem which has to pay for the incentive of the market creator who spends gas fee for creating markets on PlotX, among other things.
In my opinion, this is a short term problem given that the protocol is 5 days old. As the protocol gains traction and user confidence, liquidity will increase. But for the protocol to gain traction it may be prudent to have rewards for bootstrapping liquidity on the prediction markets.
Taking a cue of bootstrapping liquidity from Compound Finance, COMP is given to users each time they interact with a Compound market (by supplying, borrowing, withdrawing, or repaying the asset). Similarly, Uniswap sponsors 4 markets (ETH/USDT, ETH/USDC, ETH/DAI, ETH/WBTC) by providing UNI tokens for liquidity providers in addition to the 0.3% fee.
In that spirit, this proposal of PlotX Participation Mining will allow the protocol to bootstrap liquidity by providing incentives to participants, irrespective of whether they lose or win.
For each market, the PlotX Ecosystem Fund will sponsor X number of PLOT tokens as incentives for participation. The incentives are distributed across the participants based on the positions that they hold against total positions in the market.
PLOT tokens per participant = (No. of participant positions / total positions in the market) * X
Incentives are distributed to participants across all options. This is over and above the reward pool that exists for winners as per the market participation.
Programme Details Proposed:
- Duration = 2 weeks
- Incentives in hourly market = 100 PLOTs
- Incentives in Daily Market = 1000 PLOTs
- Incentives in Weekly Market = 2000 PLOTs
- Budget per market = 51600 PLOTs, applicable on ETH/USDT and BTC/USDT markets
- Total Budget = 103,200 PLOTs
In the 1st week of launch, it was observed that users fear being the 1st participant due to the fact that there could be no one else participating, meaning risk of being incorrect vs no rewards in case of being correct.
While changes are being considered to remove the loss of funds in case of sole participants being wrong, it would need changes in protocol, followed by code review and community governance leading to smart contract upgrade.
On the other hand, an incentive mechanism as described above can be implemented as part of the existing protocol design and can be executed with minimalistic UI changes (off-chain) and an on-chain governance vote for whitelisting the sponsor Ethereum address. It is to be noted that for the sake of optimizing speed, this governance vote for sponsoring markets can be passed by the Advisory Board of PlotX, which is currently constituted of Ish Goel, Kartic Rakhra & Satheesh Ananth.
While it would have been ideal that incentives are given only to participants participating via PLOT, minimalistic code changes and fulfillment of the primary purpose “increased participation” have been kept in mind in designing this proposal.
The above approach also incentivises early entrants as participation incentives are calculated based on proportional positions and early participants get a lower option pricing.
This also incentivizes participants to “Stake and Play” as it leads to more positions again.
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